ATandT CEO: T-Mobile Merger Won't Hurt Competition

 
 
By Michelle Maisto  |  Posted 2011-04-04
 
 
 

AT&T CEO Randall Stephenson is disputing accusations from competitors and some analysts that his company's $39 billion bid to buy rival T-Mobile will hinder a wireless market that he describes as "fiercely competitive."

In an interview published April 4 by USA Today, Stephenson offered some answers, and more hints at answers, to a number of looming questions regarding the proposed T-Mobile deal. Writer David Lieberman gave Stephenson a proper grilling, but pulled very few straightforward answers from the politician-smooth executive. One of the hard facts however, is that in time, T-Mobile customers can expect access to an Apple iPhone.

"Of course. If you're a T-Mobile customer, that's one of the great advantages. The handset selection that AT&T offers would become available to T-Mobile customers," Stephenson said, in response to whether "all of the AT&T handsets" would be available to T-Mobile customers once the deal goes through.

T-Mobile, already facing a barrage of questions and concerns from subscribers, recently posted a note on its Website, reminding customers that it is for now an "independent company."

"The acquisition is expected to be completed in approximately 12 months," states the note. "We do not offer the iPhone. We offer cutting-edge devices like the Samsung Galaxy S 4G and, coming soon, our new Sidekick 4G."

Regarding T-Mobile's status as an independent company, Stephenson said he envisions that it will stay that way.

"T-Mobile will continue to operate their business exactly like they have," he told USA Today. "They market directly against AT&T. I envision them to continue marketing against AT&T in the marketplace."

Analysts have predicted that T-Mobile customers, who have enjoyed some of the lowest rates in the industry, can expect a price bump once the company is folded into AT&T, but Stephenson slipped and slided his away around the question, saying a price bump would "defy history," as pricing in the industry has been coming down over the last 10 years. When pressed by Lieberman, who asked whether Stephenson was willing to make a commitment to T-Mobile customers that their fees wouldn't jump, Stephenson didn't quite say "I do."

"We have a history, when we acquire one of these companies, we map their rate plans into AT&T," he said. "So if somebody chooses to stay on that rate plan, those rate plans are available."

All the talk will be moot, should the deal - which is expected to require a number of concessions from AT&T, including the divestment of portions of the T-Mobile spectrum, which small-fish Sprint is expected to gobble up - not get the necessary approval from federal regulators. Stephenson, however, appeared confident that it will, building an argument about the importance of AT&T being able to effectively compete in the wireless market of five years from now, and shooting down suggestions that the loss of one carrier would make for a less competitive marketplace.

In 18 of the top 20 markets, customers have five carriers to choose from, Stephenson said, suggesting that by its very existence-rather than whether it's able to offer the most popular handsets-a rival carrier would continue to be competitive with a combined AT&T-T-Mobile. "It's a fiercely competitive market today. It will be a fiercely competitive market after this deal is done," he said.

Lieberman answered that the Federal Communications Committee - which presumably considered a lot of data - "last year, for the first time, did not conclude that the market is competitive."

Stephenson responded, "We would obviously take exception to that. I think the data would argue that that's not the case. When the average customer has a choice of five different providers, that's a very competitive market."

Sprint executives have argued that the merger would undo three decades' worth of action by the federal government, which is expected to weigh the matter carefully. FCC member Michael Copps, in an interview on C-Span's "The Communicators" program April 2, suggested he was doubtful that the deal - which would put AT&T and Verizon in control of 70 percent of the wireless market - would leave a very competitive marketplace.

Members of the FCC will need ask themselves - if the merger is approved - what "residue of competition" would be left, he said. Even with concessions, Copps said, he wondered if it was worth putting so much energy into a deal that, in the end, many would still find only "minimally acceptable."

"Is that the kind of telecommunications market we ought to be working for?" he asked.

Ideally, Americans, more so than the carriers, will make their voices heard about whether they think so.


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